It's confirmed: Canadian business leaders are a lot more risk-averse than Americans – 18 per cent more, in fact – according to a new report being released Wednesday by Deloitte Canada.
And the research helps solve the puzzle of why Canada chronically lags the United States in innovation and productivity.
"Canadians manage risk really well. We've seen that coming through the recession," Bill Currie, vice-chairman of Deloitte Canada, said in an interview. "But the ability to take risk for some businesses is less than what you would find with their American counterparts."
The conclusions are based on a survey of 900 senior executives – half Canadian, half American, and spread over companies of varying size and type. Deloitte then ranked the executives based on their corporate behaviour, including willingness to invest and to do research and development, as well as their response to government incentives.
The result is a "risk-behaviour" score of 57.7 for Americans and 47.4 for Canadians, after compensating for a generally much more pessimistic outlook about the economy among U.S. respondents.
"It's about being Canadian and how we grow up and the environment that we're in," explained Larry Scott, a Deloitte vice-chair and chief strategy officer.
The survey also found a significant gap between how Canadians see themselves and how they act.
"Canadians may label themselves as equally risk tolerant [as Americans, but]when it comes to putting their money where their attitude is, they hesitate," according to the report, The Future of Productivity: An Eight Step Game Plan for Canada. "This 'action gap' is a distinct difference that sheds light on the Canadian productivity conundrum."
Canadian productivity has lagged that of the United States since the mid-1980s, and the gap has continued to widen in recent years. The report pointed out that Canadian productivity grew an average of 0.7 per cent between 2001 and 2009, ranking it 18th among 22 OECD countries.
Like other many other reports, Deloitte identified several other problems, including chronic underinvestment in machinery and equipment, an economy that remains too sheltered from global trade, inefficient government support for innovation and a lack of risk capital.
The good news is that Canada has a window of opportunity to address the productivity gap, Mr. Currie said. Its economy has come through the recession relatively well, and with a dollar above par, companies can buy foreign-made machinery more cheaply.
Deloitte offers an eight-step plan to correct the productivity imbalance that includes retooling primary and secondary education to help change attitudes toward innovation; attracting more skilled immigrants; aligning government R&D incentives to real needs; creating better-defined industry clusters; introducing tax credits for so-called "angel" financing; making the net benefit test for foreign investors more transparent; and finishing backlogged trade deals.
But change won't come quickly or easily. "This is a long-haul problem for the country," Mr. Scott said.
Meanwhile, a report released Tuesday by the Conference Board of Canada highlighted another aspect of the country's innovation problem – the dearth of Canadians getting advanced engineering and science degrees.
"Canada falls to the back of the pack when it comes to advanced knowledge and skills, such as graduates from PhD programs and science and engineering disciplines," said Michael Bloom, vice-president of organizational effectiveness and learning.
There's a direct link between the number of those grads and the share of a country's economy tied to "knowledge-intensive industries" and high-tech manufacturing, the Conference Board said.
Canada ranks dead-last among 17 peer countries in producing PhDs. It also ranks low in churning out patents per capita.